Filing Extensions without Penalties and Interest

Washington, DC, (April 7, 2014) Wasn’t it generous of Uncle Sam to offer extensions on filing your tax returns? Hmmm…wait, that doesn’t sound like the Uncle Sam we know! So, what’s the catch? When an extension is filed, it is just an extension on the time to file; it is not an extension on the time to pay. If a taxpayer owes $1,000 on a personal return and files an extension, he or she has until October 15 to file the return. But, if the $1,000 is still owed on April 15, interest and penalties start to accrue. To avoid paying a penalty, make as accurate an estimate of your tax liability as possible, based on the information you have. If it appears you will have a balance due, make a payment before April 15. If your information changes between the extension and the actual filing of your return, at least you will have minimized your penalty.

“If filing your return by April 15 of this year just isn’t going to happen, there are actually several ways you can request an automatic extension of time to file an individual return,” reports Betsey Buckingham, EA, an enrolled agent with David C. Murray and Company, Inc. of Troy, OH and President of the National Association of Enrolled Agents. “You can e-file the Application for Automatic Extension of Time to File US Individual Tax Return, which can be found on the IRS website (look for Form 4868), or you can print that application out and mail it to the IRS. All or part of your estimate of the income tax due can be paid with a credit or debit card, or by using the Electronic Federal Tax Payment System.”

You can find a list of service providers on Form 4868 through which you can pay your tax debt by phone or Internet. The fee charged will depend on how much money you are transferring. Be sure to hang onto the confirmation number they give you, in case IRS comes calling later.

If IRS does come calling this year, you should probably get in touch with a licensed tax professional. If you hired one to do your tax returns in the first place, you should be in good hands. Only enrolled agents (EAs), CPAs and attorneys have unlimited rights to represent you before the IRS. The term “enrolled agent” reflects that an EA can act as your agent before administrative levels of the IRS – meaning he or she can talk to or meet with IRS in your stead. That’s one meeting most of us would be happy to miss! To find an enrolled agent in your area, visit the searchable “Find an EA” directory at www.naea.org.

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The National Association of Enrolled Agents (NAEA) is the professional society representing tax preparers who have earned the distinction of “enrolled agent” (EA). EAs are federally licensed to represent taxpayers before the IRS for audits, collections and appeals.